The alleged "rogue trader" Jérôme Kerviel deliberately set out to "lose" hundreds of millions of euros to conceal his previous, secret "winnings", it emerged over the weekend.
M. Kerviel, 31, who is said to have blown nearly €5bn (£3.7bn) of his bank's money, is likely to be formally accused of at least three counts of fraud in the next few days.
The young man was being questioned by Paris fraud squad officers for a second night yesterday. Jean-Michel Aldebert, head of the fraud section of the Paris public prosecutor's office, said that the interrogation had been "extremely fruitful" and had revealed "interesting new elements".
M. Kerviel was said to be "feeling well" and co-operating fully with attempts by investigators to unpick what is said to have been a colossal tapestry of unauthorised, and puzzling, trades on shares futures over the past 13 months.
A series of revelations over the weekend give bizarre, and intriguing, new insight into the trader's alleged activities. His former bosses, at Société Générale, France's second largest bank, say that M. Kerviel had, over a period of many months in 2007, bet €50bn in a clandestine computer game of his own invention.
They originally described his winnings as "modest" but evidence which emerged in Germany at the weekend suggests that, by the end of 2007, he may have earned as much as €1bn on secret, undeclared trading late into the night.
Instead of finding some way to cash in, and abscond, with the money, he set out two weeks ago to lose his winnings – mostly, it appears, by deliberately foolhardy speculation on the German DAX shares index. His intention was to return his winning position to "neutral" and cover up his activities.
The bank's president, Daniel Bouton, said on Saturday that M. Kerviel's deliberate attempt to "take losing positions" had been too successful – leaving him with a €1.4bn loss on 18 January. This turned into a €4.9bn loss – the largest ever by a single trader – when SocGen tried to dump his trades as European markets crashed a week ago.
M. Kerviel's motives for secretly earning – and then deliberately losing – large sums of money will be at the heart of the French fraud investigation. Did he have an accomplice in another trading house, who was making profits from his losses? Was he working alone, trying to prove that he had discovered a brilliant, new, futures trading system, as his former bosses insist?
SocGen said in a statement last night that "everything points to the fact that M. Kerviel had no accomplices, inside or outside the bank.
Legal experts said yesterday that it might be difficult to make fraud charges stick against a person who made no attempt to seek personal gain. However, the young trader is also accused by his former employees of faking emails and letters from non-existent clients and using stolen passwords and logins to hack into the SocGen computer to cover his tracks.
These allegations are expected to be the basis of allegations of fraudulent abuse of documents and computers. M. Kerviel, variously described as a "genius of fraud" and a "hard-working but mediocre trader", gave himself up to police on Saturday afternoon. His custody period was rolled over for a second day yesterday.
This afternoon, M. Kerviel must either be freed to face the world's media or be presented to the parquet, or public prosecutor's office. Judicial officials said that he would almost certainly be "mis en examen", or placed under formal examination by an investigating magistrate, today or tomorrow.
Accusations and counter-accusations continued to swirl around the SocGen scandal at the weekend. The French President, Nicolas Sarkozy, suggested that the loss of almost €5bn could not just be dismissed as a "one-off accident" as the bank's president, M. Bouton, claimed. The scandal showed, M. Sarkozy said, that the world's "financial system" was "out of its mind" and had "lost sight of its purpose".
Markets experts, anonymous employees of SocGen and M. Kerviel's family continued to pour scorn on the suggestion that a previously unremarkable and honest young man could have wreaked so much damage on his own. M. Bouton, the bank's president, and other senior executives said M. Kerviel had used his knowledge of the bank's control systems, and the stolen log-ons and passwords, to devise a fiendishly complex, parallel trading business within SocGen.Reuse content